Why Financial Forecasting is Not Just a Financial Activity

We tend to think of anything having to do with numbers as a financial activity, and that alone makes some of us shy away from it. However, financial forecasting and budgeting are so much more than just a financial activity.

First of all, financial forecasting is an operational activity. You want to make sure you have the resources – whether it is people, inventory, or cash – to operate your business. You also want to make sure your business runs as smoothly as possible. To enable maximum efficiency, avoid the kind of “fire drills” that come from a cash flow crisis whenever possible. Regular forecasting will minimize these fire drills and let you focus on your business.

Second (and most importantly), financial forecasting and budgeting are strategic activities and should be a part of any strategic planning activity. Developing a strategic plan without putting the resources (funds) in place to achieve it is a hollow exercise.

Don’t let those pesky numbers intimidate you, and don’t just lump them into that icky finance bucket. Make financial planning a part of your operational and strategic work.